[UK Defence Intelligence Agency: Russian Inflation to Exacerbate Pressure on High Defence Spending]
On April 12, the UK Defence Intelligence Agency released an updated report on social media platform X, stating that Russia's long-term inflationary pressures may affect its ability to maintain high defence spending required for the war.
The report noted that on March 21, 2025, the Bank of Russia decided to keep the key interest rate at 21%. The current rate is at its highest level in over 20 years, while the pre-war rate in January 2022 was 8.5%. "With interest rates remaining high, the number of corporate bankruptcies in Russia is very likely to increase."
The report pointed out that in November 2024, the ruble depreciated to its lowest level since Russia's invasion of Ukraine in 2022 (1 USD to 114 rubles). Subsequently, the ruble appreciated, reaching a maximum of 1 USD to 81 rubles in March 2025. "The appreciation of the ruble is very likely to lead to a decrease in federal revenue calculated in rubles from oil and gas, exacerbating pressure on the federal budget deficit."
However, despite the appreciation of the ruble, inflation continued to rise. In February 2025, the inflation rate rose to 10.1% from 8.5% in October 2024 (when the interest rate had already risen to 21%). "Shortages of labor combined with high government spending almost certainly guarantee that the inflation rate will remain above the Bank of Russia's 4% target throughout 2025. Long-term inflationary pressures are very likely to exacerbate Russia's pressure to maintain high defense spending."
Original article: https://www.toutiao.com/article/1829203261480960/
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